The American investment app Robinhood, which went public this week, is extremely popular with young people, who are investing en masse. There are also more and more robinhoods in our country, a special peripheral phenomenon of the corona pandemic. ‘Our customers are getting younger and younger’, the brokers say.
“In January 2020, 13 percent of our customers were under the age of 30. Today it is 20 percent,” says Bolero, KBC’s online broker. It’s not just teens and twenties who discover the stock market. ‘A lot of investors between the ages of 30 and 40 have also joined. In 2016 the average age of the Bolero customer was 50 years, for new customers it is now 39 years.’
Competitor Binck sees a similar rejuvenation of the clientele. ‘While at the end of 2019 we still had an average age of 45 years, that is barely a year and a half later, 39 years.’ The same voice at Lynx: ‘We see significantly more people in their twenties and thirties than five years ago.’
Brokers see young people flocking
In a large-scale study on the Belgian retail investor, the stock market watchdog FSMA recently noted that the number of transactions from investors under the age of 50 increased significantly during the first lockdown. In Belgium, 45,000 investors joined at the start of the corona crisis, and another 26,000 in the first quarter of 2021. “A large proportion of these are young people,” said FSMA president Jean-Paul Servais.
Stock exchange veteran Gert Bakelants of the weekly magazine De Belegger calls the massive influx of young investors a good thing. ‘It is good that young people are getting acquainted with the fair. We’ve been saying for years that a savings account makes you poorer because inflation eats your money away. The fact that young people build up their wealth by investing is positive.’
The robinhoods are also criticized. They’ve made headlines as meme stock hype drivers like the shaky video game seller GameStop and the debt-laden American movie theater chain AMC. On forums like Reddit, young investors are said to be pushing each other to make quick money with those stocks.
“Saying it’s a bunch of gamblers is too easy,” says Bakelants. ‘They may make a purchase faster, but that is also due to the tools that exist now. In my day, you couldn’t buy a stock as quickly as you were sitting on the toilet. Because of these trendy tools, young people may still see investing as a game, but I am confident that this will become a new generation of serious investors.’
Young people may still see investing as a game, but I am confident that this will become a new generation of serious investors.
‘Young people don’t just invest in crypto coins and meme stocks either. These subjects are often discussed, but many robinhoods also invest in very solid companies in which the older generation also invests.’
The BUX app, a kind of European Robinhood where the average investor is 30 years old, also sees young investors not only busy trading speculators. ‘The style is changing’, says CEO Yorick Naeff. “When they first come in, they often trade to try out the platform, but after that they focus on the longer term. Only 20 to 25 percent of our clients are active investors with more than five transactions per month. The rest do one or two dissertations. per month.’ An average BUX customer has an account of 1,200 euros and the order size per individual order is 1,000 euros.
When customers first come in, they often trade to try out the platform, but after that they focus on the longer term.
‘Most customers are focused on building a portfolio and mainly buy trackers. Then they make one purchase every month.’ With a tracker, investors can buy a basket of shares with one click, immediately diversifying their portfolio.
The FSMA’s research also says that few Belgians invest in meme stocks. The 4,137 Belgians who traded in GameStop were mainly ‘men younger than 35 years’.
‘Younger investors seem to prefer companies they know from everyday life, such as Apple’, says Olivier Goerens, director of marketing Private Banking and Wealth Management at Belfius. That bank recently launched the RE=BEL app, where investors pay only 3 euros for small Brussels stock market orders. An order on RE=BEL is usually 2,000 euros.
Bakelants thinks the increased interest in technology companies could be a strength. ‘The new generation of investors is closer to the growth companies and dares to invest in them long before the older generation gets in. That means greater risks, but also a greater potential return.’
According to Bakelants, the current stock market climate is a risk for young investors. ‘Investors who entered during the corona crisis last year have only seen increases, so that there are almost pure success stories. That’s not to say they haven’t made mistakes, but they don’t see them right now. One day the robinhoods will run into trouble.’
That’s why the investment veteran has a tip for them. ‘Prepare psychologically for the moment when the markets are no longer running so well. Just as expensive stocks are now continuing to rise in value, cheap stocks may continue to fall. Then you have to be strong in your shoes to buy anyway. If you don’t prepare mentally, you can miss important opportunities. So free yourself from the issues of the day and keep using your common sense.’
Four Belgian robinhoods speak
Kevin Renard (30): ‘Tech companies make our work easier’
Kevin Renard (30) only invests in index trackers (ETFs) and stocks. ‘Last year I earned a lot of money as an independent nurse during the corona crisis. But as the money in my current account grew, I read that banks may start charging negative interest. Thanks to a friend the idea came up to start investing.’
Kevin believes it is important to keep the risks under control. ‘With ETFs I ensure that my portfolio is well diversified. I have a tracker that invests on the Dutch stock exchange and an ETF with stocks from all over the world. Furthermore, I only buy shares of companies that I really believe in. As a consumer, I am a huge Apple fan. As soon as I see a good buying opportunity, I want to buy shares of it.’
‘I recently bought AB Science, a company that is working on a cure for prostate cancer. I realize that the risk is greater with biotech, but in this way I help combat a deadly disease.’
‘I am also looking forward to companies in the medtech sphere that I have to deal with professionally. These are companies that ease or improve the work of healthcare staff. Many companies that make pumps for infusions or monitoring equipment are listed on the stock exchange.’
The client of Bolero and BUX mainly wants to save with his investments. ‘I would prefer to live on my dividends later on. That may not be realistic, but it is my dream. I also want to keep money on hand in view of my retirement age. Everyone knows that the affordability of pensions is uncertain. I’d like a nest egg.’
Aruna Audenaert (23): ‘I’m going for the long term, at least 20 years’
Aruna Audenaert (23) studies law at the University of Antwerp. Like Kevin, she started investing through friends. ‘It is hard on our generation. You no longer ask whether you know what investing is, but whether you invest or not. It’s the most normal thing in the world.’ She may want to enter the legal profession next year. ‘As a self-employed person you have to build up your own pension, so you do have to invest.’
Her favorite share is the AB InBev brewery. ‘That is the epitome of the Belgian economy and I want to support that.’ Aruna also tries to diversify its portfolio. ‘That’s why I’m in the holding company Ackermans and I have a tracker that tracks the S&P500.’
She has a great interest in sustainable investing. ‘On my list is an ETF that invests in European companies that are actively involved in ESG (Environmental, Social and Governance). We can no longer ignore sustainability. Companies that are not involved in it run a risk. You won’t see me investing in an oil company anytime soon.’
Aruna has nothing to do with the short term. “Friends are dealing with cryptos. That short-term work is not for me. My horizon is 20 years. I intend to hold my shares for a long time.’ She does not lose sleep over price falls such as that of AB InBev last week. “I’ll get through it.”
Like many robinhoods, the law student is absorbed in the story. ‘I did have some lessons in accounting, but not enough to make analyses. My focus is on what the company does and whether I agree with it. I also read financial blogs and keep an eye on social media for inspiration.’
Cédric Proost (21): ‘Paying for my savings was over’
Cédric Proost (21), a student of applied economics, is chairman of the investor association Capitant Antwerpen. He started investing when he was 18. ‘My parents had saved money for me. A statement from the bank stated that I received 1.50 euros in interest. Below it was stated that I had to pay 2.50 euros for sending the letter. So my savings were reduced. Then I put my money in a fund.’
During the corona year, Cédric also bought shares. ‘They just stay in the portfolio, unless something structural changes.’
Cédric also owns a gaming ETF. “I’m pretty sure the gaming industry is on the cusp of a new cycle. You see the rise of e-sports. With more and more tournaments, they increasingly seem to be the modern version of physical sports on TV. I am responding to that trend with a tracker, because I am immediately well spread out in the sector.’
Cédric gets his information from various sources. ‘I read De Tijd online and Bolero’s morning newsletter. I also find a lot of info on Yahoo Finance and I watch investment vlogs. I also read the reports of asset manager Dierickx Leys.’
He does not act overnight for his investment decisions. ‘First I look at the story and if I believe in it, I look at the numbers. Last year I was surprised that Twitter was still making a loss, although I thought it was a good medium.’
Cédric mainly invests through Bolero and DeGiro. ‘The service from Bolero is good, because you have a lot of information in the app. DeGiro is interesting if you want to invest cheaply in trackers.’
Liessa Genné (21): ‘I find it very difficult to choose stocks’
Liessa Genné (21), a commercial engineering student at Hasselt University, also became interested in investing after she received the money her parents had saved for her when she was 18. ‘The bank said I could invest that too. I did, but it turned out wrong. Although I was in a defensive fund, I lost money. I then switched funds. Now it’s better. My negative experience did motivate me to take a better approach to investing myself.’
However, Liessa has not yet bought individual shares. ‘There is so much choice. In university I gained theoretical knowledge about valuing a stock, but in practice it is much more difficult. For example, companies use different measures of profit.’
Liessa is not the only one with that problem. ‘Many family and friends are also motivated to invest, but they too often don’t know where to start. Take the concept of dispersion. Ideally, I would like to buy about ten shares in different sectors at once and thus bring balance to my portfolio. But choosing the right companies is difficult. I also don’t find many examples on the internet of what a well-diversified portfolio looks like.’ Although she is still searching, Liessa has a clear preference. ‘I prefer sustainable companies. Others are not concerned with the future.’
The student strives for financial independence. ‘The FIRE principle (Financial Independence – Retire Early, ed.) really appeals to me. In addition, I just like investing. You are aware of current events and you learn, for example, why certain companies succeed and others fail.’